News

Morning Commentary

March corn up 1 ¼ at $3.84

Jan beans up 3 ¼ at $9.1275

The DOW is down

USD is stronger

Crude oil up $2.16 at $53.65

Good morning,

Corn prices have moved very little this week. The trade seems to be balancing the optimism and rumors that Chinese buyers may eventually purchase large amounts of U.S. corn and ethanol, against the bearish talk of increasing South American and Ukraine production. The USDA is currently forecasting a heavy rebound in South American production compared to last year.  Weekly ethanol production jumped back to its highest level since late-August, reported this week at 1.069 million barrels per day. Even though this was a strong number it’s still significantly less than last year. Ethanol surplus is also about +4 to +5 million barrels higher than last year. The short term trend is slightly positive.  Setbacks that hold 378 keeps the market poised to test 390.5.  A close under 374 provides fresh downside targets.  Long, system types are risking 378. 

Soybean  traders continue to debate the uncertainty surrounding U.S. and Chinese relations. Any negative headline is causing an almost immediate knee-jerk to the downside, while headlines that might insinuate we are a step closer to a compromise are pulling prices higher. Without knowing the next round of political headlines it’s extremely difficult to forecast price. From a technical perspective, it continues to feel like major nearby resistance in the JAN19 contract is up between $9.20 and $9.30 per bushel. Keep in mind, since the middle of June, this contract only closed above $9.20 twice, with the last time being back in early-August. The $8.90 to $9.00 area continues to look like nearby support.

U.S. ag exports are always larger than ag imports, but that trade surplus is forecast to narrow this year due to the trade war with China. We already know the 2019 ag exports are projected to be down $1.9 billion to $141.5 billion largely due to decreases in soybeans and cotton. These losses are expected to narrow the trade surplus to $14.5 billion in 2019, which would be the smallest surplus since the $12.2 billion of 2007 according to USDA economists. Put that in perspective, back in 2014 the trade surplus was $43.1 billion. (Source: USDA, ERS)

As a remedy for low prices and the loss of dairy farms, delegates to the Wisconsin Farm Bureau’s annual meeting passed a resolution calling for consideration of dairy supply management. Now, this is really early and they are only “considering” the possibility of supply management. If they did develop a system to manage supply, they would put farmers in charge and keep the government out of controlling prices. (Source: Brownfield Ag)

The Commerce Department said the trade deficit increased 1.7% to $55.5 billion, the highest level since October 2008. The trade gap has now widened for a five straight months. Data for September was revised to show the deficit rising to $54.6 billion instead of the previously reported $54.0 billion. The trade deficit specifically with China surged 7.1% to a record $43.1 billion in October as soybean exports continued to fall and imports of consumer goods rose to a record high. (Source: Reuters)

 

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